This Country is on a Verge of a Recession

Statistics Canada revealed on July 31 that the Canadian economy shrank by 0.2% on an annualized basis in May, perhaps pushing the country over the edge into recessionary territory for the first half of 2015 . . .

The poor showing surprised economists, who predicted GDP to remain flat, but [instead it contracted] in the first quarter at an annual rate of 0.6%. Canada’s economy may or may not have technically dipped into recession this year — defined as two consecutive quarters of negative GDP growth — but it is surely facing some serious headwinds.

Attempts to rebound: Canada’s central bank slashed interest rates in July to 0.50%, the second cut this year, but that may not be enough to goose the economy. With rates already so low, there comes a point when interest rate cuts have diminishing returns. Consumer confidence in Canada is at a two-year low.

There are other fault lines in the Canadian economy. Fears over a housing bubble in key metro areas such as Toronto and Vancouver are rising.

“In light of its hotter price performance over the past three to five years and greater supply risk, this vulnerability appears to be comparatively high in the Toronto market,” the deputy chief economist of TD Bank wrote in a new report. (Read more from “This Country Is on a Verge of a Recession” HERE)

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